And by extension, do you not invest in what you don’t believe in? It’s an interesting question, and one many people when beginning to invest money.
It has often been said that confusing fundamentals with morals is not the way to go when considering investing in a particular stock, but I personally find it difficult to separate the two.
Take for instance the high-yielding tobacco industry. There are a couple stocks in the sector yielding around 5%, significantly more than interest rates on deposit accounts. They are relatively stable companies with good growth history.
However, I choose not to invest in this area through single stocks because I don’t believe in the company and its mission. I’ve lost a few close relatives to lung cancer, and I fail to see how the production of cigarettes helps the world.
Many people have similar feelings about gambling, genetically modified food, oil companies and other sectors where the mission of the company does not necessarily line up with your moral values.
The flip side of the argument, however, is that by eliminating certain sectors, you may be eliminating good stocks – stocks that provide an opportunity to grow your wealth.
It’s an interesting dilemma for many. And consider that we are only discussing single stocks for purposes of this discussion. Consider many mutual fund investors probably hold stocks in companies they don’t agree with through their mutual fund holdings (unless they have invested in a branded socially responsible fund).
As a beginning investor myself, I recognize that to build serious wealth you have to maintain a level of objectivity necessary to capitalize on opportunities where they exist.
However, I’m also human, and I have a strong set of moral beliefs. I’d rather be a little less wealthy with my morals in tact than filthy rich with a conscious that won’t allow me to fall asleep at night.